It looks like you are in United States. Go to the United States site Arrow right icon

Strong demand for M&A across cash-rich financial and strategic buyers is maintaining upward pressure on valuations


Strong demand for M&A across cash-rich financial and strategic buyers is maintaining upward pressure on valuations

By , April 29, 2018

According to new research released in the Equiteq Knowledge Economy Global M&A report 2018, “strong demand for M&A across cash-rich financial and strategic buyers is maintaining upward pressure on valuations…”

Some further interesting data from the report shows the median upfront component of 61% has increased slightly from 58% in 2016. This means in an average sale (deal size average was $12.1m), 61% was paid upfront.

In the Australian middle-market, 98 deals were completed with an average deal size of $11.3m and an average EBITDA multiple of 6.6x (26% were cross border deals at an average multiple of 8.1x). Interestingly, Engineering and Management Consulting achieved slightly higher multiples averaging 9.9x and 11.6x respectively.

There are ongoing increases in activity by cash-rich listed buyers and larger accounting networks looking to acquire niche capabilities. For example, Accenture announced a $1.8Bn budget for M&A for the year thru to August 2018 with the budget designed to “enhance its niche capabilities across management consulting, technology services and creative media.”

Similarly, private equity remains highly active, with record levels of dry powder for acquisitions.

The key to accessing these high value buyers is preparation – they are experienced and  “fussy” buyers and are not really looking for turnaround assets (especially at these prices) –  you need to “begin with the end in mind” and work through a strategic business succession and exit plan.

Craig West

Craig West

Executive Chairman | Succession Plus

Craig West is a strategic accountant with over 20 years of experience advising business owners. His background as a CPA in public practice has provided invaluable experience in the key issues of concern to business owners.

In March 2014, Craig was appointed Executive Chairman of the SME Association of Australia, Australia’s largest small business organisation representing over 300,000 business owners.

In October 2014, he was awarded the Exit Planner of the Year at the Exit Planning Institute Annual Conference in Texas, USA, due to his innovative development of an exit planning process to help business owners maximise business value and achieve a successful exit.

Craig’s proprietary structure - a Peak Performance Trust - has won the Australia-wide award for the Employee Share Ownership Plan of the year twice in four years.

In November 2018, Craig launched SME Experts in partnership with Mark Bouris’ Mentored on Podcast One and quickly grew the monthly podcast audience to over 26,500 downloads; in October 2019, he released a new podcast focused on medium-sized businesses - Mid-Market Matters.

In July 2021, Craig joined the NSW Committee for STEP (Society of Trust & Estate Practitioners) – focusing on advising families across generations.

Craig has also launched a SaaS platform, Capitaliz (which captures the 21-step process), to assist other advisers internationally deliver advisory services at scale.

In November 2021, Craig was appointed Executive Chairman of NSW Leaders, a business mentoring group for leading NSW businesses.

In July 2022, Craig West received the award of Doctor of Business Administration for his research thesis titled “Examination of the key factors driving business exit options in Australian Small and Medium Enterprises.”

Craig is passionate about encouraging business owners to think strategically, maximise the value of their business and achieve a successful exit.

Interested in offering staff a stake in your business?
Get your free ESS guide.